Hybridisation of their power supply, through the inclusion of renewables, offers Australian mining companies the opportunity to score a significant “triple win” in the form of reduced cash operating costs, reduced fuel prices and reduced exposure to carbon risk.
For juwi Renewable Energies, the significance of these savings, coupled with the falling costs of battery technology, rapid advancements in hybrid technology and the low interest costs in Australia, have underlined the benefits of hybridisation to the point where they cannot be ignored.
“For mines around the world, the economic case for renewables has grown tremendously in the last 24 months, and hybridisation has become an important tool in achieving cash operating cost reductions,” points out Amiram Roth-Deblon, juwi’s Head of Global Business Initiatives.
This June 27, Roth-Deblon will provide details on the economics and applications of renewables hybrids for mines in front of an audience of over 300 senior mining and renewables experts at the second annual Energy and Mines Summit focused on renewables integration for mines.
The Positive Economics of Renewable Energy
According to Roth-Deblon, the competitive price of renewable power is a fundamental part of what makes hybridisation such an attractive option for both off-grid and grid-connected mines.
In most locations, wind and solar continue to provide a lower cost of power than diesel or gas. Even in Western Australia, where gas often is cheaper than on the eastern seaboard, hybrids deliver lower power costs and greater price security than pure gas power stations.
Depending on locally available wind and solar conditions, fuel savings from hybridisation can amount to up more than 70 per cent. The cost of solar modules alone has consistently fallen by around 20 per cent with every installed capacity. This, in turn, has led to an annual cost reduction in the range of 3 per cent to 8 per cent year on year.
As battery storage becomes an increasingly vital part of high-penetration renewable systems, Battery Energy Storage Systems (BESS) have crossed a threshold that makes them commercially viable for power applications. A lithium-Ion battery today costs less than a quarter of what it cost seven years ago. Bloomberg New Energy Finance projects battery prices will be around $US73/kWh in 2040 as compared to around $US250/kWh in 2017.
Taking that into account, scenarios modelled by juwi indicate that, by 2030, a solar battery hybrid system could cover 100 per cent of the energy needs of an off-grid mine, with a project payback period of just 4.5 years. This would include the energy for electric mobile plant and equipment.
Grid-connected mines are also in a position to reap the benefits of hybridisation. Renewables represent the least-cost option for many grid-tied mine operators. Currently, forward pricing for grid power in Australia is in the range of $60–80 per megawatt hour (MWh), while the 2017 Victoria renewable energy auction set a record low fixed price for wind of $50–60 per MWh over 12 years.
Reaping the Benefits of Hybridisation at DeGrussa
Cost and and reliability savings without negative impact on power quality, are fundamental to the business case for renewables. juwi’s hybrid power plant at Sandfire Resources’ DeGrussa mine in Western Australia is one such project, representing an excellent example of the benefits of hybridisation in a real world environment.
Currently, the project is offsetting more than 450,000 litres of diesel per month, exceeding juwi’s projection of five million litres of fuel saved per year for DeGrussa. This adds up to more than 25 million litres of diesel saved within the 5.5 year contract period, translating to around 20 per cent of the mine’s fuel consumption. This reduces the mine’s yearly carbon dioxide emissions by 12,000 tons.
According to Roth-Deblon, the addition of wind power to the mix can further increase fuel savings. “Costs for wind power have been attractive for some time now, and they continue to fall. This is driven by expanding turbine sizes and tapping into higher wind speeds above hub heights of 115m.”
“With wind we can deliver power at night as well. In Western Australia the wind can be fairly consistent and often blows strongest between dusk to dawn. This effectively complements power from solar installations,” notes Roth-Deblon.
He continues, “At sites where we also integrate wind, the mine can offset more than 75 per cent of its fossil fuel usage. We are currently designing such solar wind battery hybrids for multiple sites in Western Australia.”
Using New Technology to Overcome Traditional Barriers
Traditionally, the length of mine life has been a deciding factor in the economics of adopting renewables. As Roth-Deblon points out, “Mines that can enter into contracts for longer contract periods, let’s say for seven years or longer, have a significant advantage in procuring cheaper power. A one year longer power contract can reduce the price from solar or wind by as much as 15 per cent.”
In Roth-Deblon’s opinion, the best way for mines with a shorter projected mine life to benefit from hybridisation is to take advantage of redeployable power generation systems. “In order to make this lower pricing accessible to mines with shorter contract periods, two main topics need to be addressed,” he comments. “First: A reliable and efficient technical solution for redeployment, and second, a robust commercial structure that enables redeployment.”
However, as Roth-Deblon acknowledges, redeployable technology is yet to be widely adopted, and the perceived risk by power station owners for securing redeployment is still a limiting factor. “So far the industry has only seen smaller scale systems with low renewable energy contribution,” he notes.
Investing in renewables at mines today provides maximum shareholder value
Adopting renewables results in lower fuel costs, lower carbon emissions and less exposure to energy price volatility. In Roth-Deblon’s opinion, these savings, coupled with recent technological advancements in battery-based and redeployable solutions are set to overcome many of the remaining barriers to integrating renewables.
“Waiting for further cost reductions will unnecessarily decrease the available mine life and power supply contract period. This, in turn, leads to a higher power price. Therefore investing in renewables today is financially and technically prudent.”